Introduction to Last Mile Delivery: Challenges and Solutions

After e-commerce became the new commerce, customer expectations for fast delivery of products have become a challenge.

Last year, retail eCommerce had sales up to 4.28 trillion US dollars worldwide. With over two billion people purchasing goods online, customer behavior and expectations changed a lot, and therefore, the old ways of managing last-mile delivery are no longer appropriate. Todays’ consumers want good quality products with low prices, and delivered quickly at no extra cost.

So, what is Last Mile Delivery? What are some of the challenges and solutions? And what is the future of last-mile delivery?

After you place an order, the product you ordered at the fulfillment center is picked, packed, and delivered in bulk with other products to a warehouse near you. Then the last mile delivery journey begins. It is a sequence of activities starting when the delivery person picks your product at the warehouse, puts it in a local delivery vehicle, and comes to put it in front of your doorstep.

Last-mile delivery is not limited to only retail e-commerce. It is also a critical process for restaurants and grocery stores offering home delivery, for pharmacies delivering medicines to your home, and so on. In general, last-mile delivery is relevant to all businesses delivering products directly to consumers. In this article, we focus on the e-commerce case: last mile delivery of parcels.

Challenges for Last Mile Delivery

Since each product is managed individually, the last mile delivery process is the most challenging, time-consuming, and expensive part of the entire delivery process. It requires many people, a large fleet of vehicles, and a lot of money, especially for same-day delivery. And because of the Amazon effect, same-day delivery is becoming the new norm.

Customer expectations and behavior have changed a lot in the last few years. Customers want to choose from a variety of good quality products at an affordable price with many delivery options. Not surprisingly, free is usually the preferred option. And if a customer had a bad experience with the shipping service, there is a big chance that he or she will buy from a competitor and never come back. Customers also want full visibility of the status of their order. They want to see real-time location, and when it will reach their doorstep.

From an accounting standpoint, the last mile delivery process accounts for 53% of the total shipping costs. This is primarily due to the complexity of a last mile delivery network. It leads to more time on the road, many stops, failed deliveries, and often, unnecessary miles traveled. Driver’s salaries also make up an important part of the total cost.

Another prominent challenge facing traditional last mile delivery is that it is not sustainable. The increasing number of delivery vehicles and the complexity of roads are causing an increase in air pollution, congestion, and noise, along with fuel inefficiency due to the nature of the delivery process.

Solving Last Mile Delivery Problems

Even though these challenges look hard, solving them will bring many opportunities and benefits. By improving the last mile delivery process a company can increase customer loyalty and build its reputation. The last mile delivery process accounts for 53% of total shipping costs because it must focus on speed, visibility, accuracy, timely delivery, and sustainability. Therefore, finding opportunities for cost reduction is crucial. If it can be done, overcoming challenges and finding ways to reduce the cost of last mile delivery can become a competitive advantage for businesses.

Here is a list of some potential solutions for addressing last mile delivery problems:

Last Mile Delivery Software: Using the right software will streamline the delivery process, improve supply chain visibility, and make it more efficient. An appropriate software solution has the following features: It uses route and delivery resource optimization; it automates vehicle dispatch work, tracks parcel deliveries, communicates with customers, and has a proof of delivery capability.
Click and Collect Method: This is a customer fulfillment and re-centralization delivery method where customers choose a convenient local store and a specific time they wish to collect their purchases. This method shifts some of the work to customers, so it reduces distances traveled, delivery route complexity, and streamlines activities to reduce the cost.
Crowdsourced delivery: This is where local drivers take charge of delivering parcels to local consumers. Benefits of this model include speed, fewer failed deliveries, greater customer satisfaction, and lower vehicle costs since those couriers use their own vehicles. Amazon, for instance, is using this model through Amazon flex, where drivers choose when to work based on their availability and location.

Final Thoughts

To gain a competitive advantage in last mile delivery, shippers need to be aware and understand the trends in delivery models. Many powerful developments are happening in this area, from delivery robots and drones to electric vehicles. Advancement in technology happens continuously; it is changing and revolutionizing traditional last mile logistics.

Ecommerce giants like Amazon and Walmart are leading the way. Other companies must be prepared to follow their lead because the future of last mile delivery is FAST and GREEN.